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A Better Partnership


May 2009
May 20, 2009

Estate Planning Focus - Spring 2009


Are you enjoying the rollercoaster ride that is your future? The financial markets, which are for the most part in disarray, portend doom and gloom. As politicians scramble to boost the economy and inject confidence into a shaken nation, vast amounts of pension and retirement funds are lost.

Is it time to cut your losses, liquidate everything and stick those meager funds under the mattress until the financial smoke clears?


Today's Estate Planning Focus contains a number of examples in which decreased market values are actually advantageous to some wealth management techniques. In fact, now might be a very good time to give a gift.

Giving gifts of depreciated assets allows all future value appreciation to escape Wealth Transfer Taxes. As the markets rise and stock values appreciate, this can be a gift that keeps on giving at a very nice tax rate.

Now also might be a good time to make minimal-interest loans to immediate family members or other related parties. Related-party loans must be made at minimum (safe harbor) interests rates to avoid tax consequences. These safe harbors vary based on the duration of the loan and the timing of the required loan payments. Most of these safe harbor rates hit historic low levels in February and still are under 1 percent. Those rates are low enough to invest the amount from a minimal-interest loan in CDs at a return of approximately 2.8 percent and save a significant amount in Wealth Transfer Tax. For more on estate planning in a depressed market, see the article on Page 3.

To preserve a high tax basis after death, there are a couple of actions that can be taken during difficult financial times. For a story on making gifts before death or making a sale to related parties, see Page 1.

Our authors also look ahead at changes in rules for distributions from retirement plans and IRAs (Page 6) and what’s next for the estate, gift and generation-skipping transfer taxes (Page 5).

The financial markets' performances over the past several months have been depressing, but remember that for every action there is a reaction. Now is a good time to find that silver lining and make adjustments to your estate plan that will have positive tax consequences down the road.


The T&E Group welcomes its newest member, Frank E. Henke, as a senior counsel in Warner's Sterling Heights office.

Frank has 15 years of experience and concentrates his practice on complex estate and trust planning, tax and business succession planning, business and corporate law, probate estate and trust administration and charitable and tax-exempt organizations.

He is a member of the Probate and Estate Planning and Tax sections of the State Bar of Michigan, the Macomb County Bar Association and the Macomb County Probate Bar Association. He also is a member of the Financial and Estate Planning Council of Metropolitan Detroit and the Financial and Estate Planning Council of Macomb County.

Frank serves as legal counsel to the Sterling Heights Community Foundation, Macomb Township Community Foundation, Macomb Charitable Foundation and Macomb County Chamber of Commerce. He can be reached by calling 248.784.5008.


Q: Is there a simple checklist I can follow for estate planning?

A: Each estate and family is unique, so there is no one-size-fits-all solution to estate planning. There are some basic steps that should be followed in the estate planning process, however. These include: make a will; consider a trust; make health care directives; make a financial power of attorney; protect your children’s property; file beneficiary forms; consider life insurance; understand estate taxes; cover funeral expenses; make final arrangements; protect your business; and store your documents in a place available to the executor of your estate. Keep in mind this “checklist” is only a guide to a basic plan. You should contact an experienced estate planning attorney for individualized assistance.

Q: If I title all of my assets jointly with my children, do I need a will?

A: Although joint ownership avoids probate on death, there are a number of significant disadvantages to using joint ownership as an estate plan. These include: joint owner having access to your funds at any time; creating a "first to the bank wins" race upon your death; your assets may become subject to the joint owner’s financial difficulties or divorce settlement; it doesn’t address what happens if the child predeceases you, and can result in unequal shares for your heirs. To discuss simple but much more effective and safe ways to avoid probate, contact an experienced estate planning attorney.

"I Was Wondering" gives readers an opportunity to ask questions of our T&E attorneys. Not all questions will be answered publicly. To submit a question, please send it by e-mail to Lori Tuttle at

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